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Eventually, an independent business owner must price his/her product/service.
Before your product/service reaches the customer, a number of cost accumulating
activities have taken place. These have to be calculated and taken into account.
But also other factors must be taken into consideration before choosing the
correct sales price.
Target Group Demand
Your target group conditions influence the pricing:
- What are the customers´ requirements, buying motive, expendable capital?
- Season, trend, fashion
- The customers´ price expectations – psychological price, corporate
image, price and quality, etc.
Put yourself in the customer’s position, then fix the price. During periods
of low income for the consumer it may matter whether your product/service is a
necessity or a luxury item.
Market Structure
Depending on the competitive situation in your market you must at least
investigate:
- General price level of the product/service
- Are the competitors campaigning on price?
- What other competitive parameters apply?
Inter-changeability
If price is the most important parameter you must also consider if other
products/services are inter-changeable with yours. If you sell take away spring
rolls and your neighbour sell hamburgers these products are inter-changeability.
The customers´ hunger will be satisfied from both products.
The higher inter-changeability the more the customer gains from purchasing
the cheapest product/service.
- Go to next
business issue: Credit Sale
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Copyright © 2009 Dynamic Business Plan 07-02-2012
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